Global News

Sunday September 05, 2010

Who Owns the Fed?

It's been forecast by everyone but those beating the Obama Democratic drums. Even today, many pundits were saying that inflation wasn't going to be much of a concern but then Thursday afternoon, Ben Bernanke & Boys raised the Discount Rate from .50% to .75%! This is the opening salvo of interest rates that might have to reach DOUBLE DIGITS to contain the massive printing of money that's been going on. 

The Federal Reserve decided Thursday to boost the rate banks pay for emergency loans. The action is part of a broader move to pull back the extraordinary aid it provided to fight the worst financial and economic crisis since the 1930s. The move won't directly affect borrowing costs for millions of Americans. But with the worst of the financial crisis over, it brings the Fed's main crisis lending program closer to normal.

The Fed decided to bump up the so-called "discount" lending rate by one-quarter point to 0.75 percent. The increase takes effect Friday.

The central bank said the action should not be viewed as a signal that it will soon boost interest rates for consumers and businesses. Want to bet? Record-low borrowing costs near zero are still needed to foster the recovery, it said. The Fed repeated its pledge to keep interest rates at "exceptionally low" levels for an "extended period." But with unemployment still near double digits, and demand for loans remains weak, many ordinary Americans and small businesses have found it difficult to borrow.

Who can afford to borrow?

Meanwhile the Producer Price Index for Finished Goods rose 1.4 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. In January, at the earlier stages of processing, prices received by manufacturers of intermediate goods climbed 1.7 percent, and the crude goods index jumped 9.6 percent. On an unadjusted basis, prices for finished goods moved up 4.6%

The translation is? There is BIG trouble ahead.

George Ure interpreted the data as follows. "The ugly thing here is that over three months we've seen finished goods up 3.64% which annualizes to what? Oh, 15.36% annual inflation at the finished goods level based on the latest running three-month numbers. And that says WHAT? Compound that three-month period four times for a year's worth and you get an implied crude goods inflation of (might want to sit down for this...) 86.1%!

Whatever number you want to plug in it doesn't matter because it all spells doom. Bush started this whole MESS; however, Obama is making it ten times worse. I sincerely do not think he understands what he's doing. I'm giving him credit by saying he and his team are over their heads and instead of admitting it, they're moving "bull-headed" for the cliff. And, we're with them in the crash!

Or, must we be?

Check me out on www.facebook.com and twitter.com ...also, thank you for upvoting this video on Reddit and Digg www.reddit.com digg.com Video Rating: 4 / 5